CLEAN NOTE POLICY, DEALING

WITH DIFFERENT KIND OF NOTES

, CURRENCY CHEST OPERATION
ETC.
SESSION OUTLINE
➢ CLEAN NOTE POLICY

➢ HANDLING OF COUNTERFEIT NOTES

➢ NOTE REFUND RULES

➢ FACILTY FOR EXCHANGE OF NOTES & COINS

➢ CURRENCY CHEST OPERATIONS

➢ RBI GUIDELINES FOR LEVY OF PENAL INTEREST OR

/AND WRONG REPORTING
 Objective of Clean Note Policy of RBI is to
provide good quality currency notes &
coins to general public.

It implies that that note packets are not to

be stapled with pins but are to be secured
with paper bands etc.
Clean
Note Writing on currency notes is also
discouraged.
Policy
RBI has directed all banks to sort out notes
into issuable and non-issuable, and issue to
the public only the clean notes.

Banks are also required to extend note

exchange facilities to public freely based
on their guidelines & note refund rules.
 Similarly, the customers will tender at their
banks notes only in unstapled condition

Under the present system of mechanized

processing of banknotes, inscription or
Clean scribbling on any part of the banknote would
render it to be classified as unfit for reissue
Note
So, dealing officers and staff to forthwith stop
Policy writing / scribbling of any kind on any part of
the banknote to ensure achievement of the
objectives of clean note policy

Branches will strictly follow the RBI's instructions

issued, from time to time, under the Clean
Note Policy
 Bank has installed note sorting machines
capable of segregating the notes into
issuable, non-issuable and suspect
categories in all bank branches.

Note packets are to be prepared as per

Clean Clean Note Policy of Reserve Bank of India.

Note
Policy The remittances of non-issuable, soiled and
mutilated notes are required to be sent to
RBI at regular intervals.

RBI has a scheme of incentives & penalties

for banks in this regard. It is known as the
Currency Distribution & Exchange Scheme
for rendering customer service to public.
 Handling of Counterfeit Currency Note

Bank notes tendered over

the counter or received
Counterfeit money is imitation
directly at the back office/ Counterfeit notes shall be
currency produced without
Currency Chest through bulk impounded by all Bank
the legal sanction of the
tenders should be examined branches.
government
for authenticity through Note
Sorting Machines (NSMs).

No credit to customer’s
account is to be given for
In no case, the counterfeit
counterfeit note, if any,
notes should be returned to
detected in the tender
the tenderer or destroyed by
received at branches over
the bank branches.
the counter or at the back-
office / currency chest.
 Failure of the branch/back office/Currency Chest to
impound counterfeit notes detected at their end will be
construed as willful involvement of the receiving
Cashier/Cash officer/Joint Custodian concerned in
circulating counterfeit notes and penalty, if any imposed
by RBI will be recovered from erring employees apart
from taking action as Bank may deem fit.

Handling of
Counterfeit With a view to facilitating the detection of counterfeit
notes, all branches/ identified back offices should be

Currency equipped with ultra- violet lamps / other appropriate

banknote sorting / detection machines.

Note

The branches shall maintain a daily record of the notes

processed through the Note Sorting machines, including
the number of counterfeits detected.
Handling of Counterfeit Currency Note

Each Bank Note which on examination of various security

features/parameters is determined as counterfeit one by the concerned
official at counter or back office/Currency Chest will be stamped as
“Counterfeit Note” with a stamp having uniform size of 5 cm X 5cm.

Each such impounded note shall be recorded under authentication, in

Forged Note Detection and Impounding Register under authentication of
cash officer and Accountant of the branch/office concerned
Issue of Receipt to tenderer

When a banknote tendered at the counter of a branch/back office or

currency chest is found to be counterfeit, an acknowledgement receipt
must be issued to tenderer in the prescribed format

The receipt in running serial number should be authenticated by receiving

official and tenderer.

The receipt is to be issued even in cases where the tenderer is unwilling to

countersign it.
Handling of  It is necessary to ensure that the cash
handling staff in banks and treasuries
Counterfeit / subtreasuries is fully conversant with
Currency the security features of a banknote

Note  With a view to educating the branch

staff on detection of counterfeit
notes, the design and security
features of all the banknotes must be
displayed prominently at the
branches for information of the public
 Details of security features of the New
Design banknotes of all
denominations notes inclusive of Rs.
2000 and Rs. 500 are available at the
link
https://www.paisaboltahai.rbi.org.in/
Handling of Counterfeit Currency Note

If the branch does not concur with the

findings of RBI officials regarding
currency notes declared as counterfeit,
matter to be taken up with the
concerned Regional Office of RBI
requesting them to refer the suspected
notes to the Note Printing Press for
examination/confirmation under advice
to Nodal Bank Officer concerned
Penalty at 100% of the notional value of
counterfeit notes, in addition to the
recovery of loss to the extent of the
notional value of such notes, will be
imposed if failed to detect
Handling of Counterfeit Currency Note

Counterfeit notes so detected and impounded must be

entered on the same day in Counterfeit Currency
Reporting(CCR) portal, available in SBI Times=> More
Links=> SBI Single Sign on => Counterfeit Currency
Reporting.

Branches will report such Fake Indian Currency Notes

(FICNs) on CCR portal also which are detected by RBI in
remittances sent to them or detected during inspection
conducted by RBI
 When a banknote tendered at the counter of a
branch/back office or currency chest is found
to be counterfeit, an acknowledgement
receipt must be issued to tenderer in the
prescribed format, after stamping of notes as
prescribed above. The receipt in running serial
number should be authenticated by receiving
Issue of official and tenderer. The receipt is to be issued
even in cases where the tenderer is unwilling to
Receipt countersign it.

to
tenderer
Notice to this effect should be displayed
prominently at the offices / branches for
information of the public
Reporting to Police
The following procedure should be followed while reporting incidence
of detection of counterfeit note to the Police:

For cases of detection of counterfeit notes up to 4 pieces, in a single

transaction, a consolidated branch wise report in the prescribed
format (Annex III) based on data extracted from CCR portal should
be sent by the Branch Manager to the Police Authorities or the Nodal
Police station, along with the suspect counterfeit notes, at the end of
the month.

Branch would also forward a copy of the format to the Nodal Officer
for information. Acknowledgement to be obtained and kept on
record
 Chief Manager (Compliance & Risk) of the concerned
RBO will act as Nodal Bank Officer for all the districts
falling under the jurisdiction of the RBO

All cases of reporting of counterfeit note detected should

be routed through the Nodal Bank Officer only and he will
be the single point of contact for all activities related to
detection, impounding and reporting.

FILING OF However, reporting through the Nodal Bank Officer

voidable delay due to large number of branches in an
FIR RBO spread over districts/geographies.

Branches should, therefore, report to Police Authorities

under advice to Nodal Bank Officer to minimize delay
and ensuring better compliance

A copy of the monthly consolidated report/ FIR shall be

sent to the Forged Note Vigilance Cell constituted at LHO
by the Nodal Officer.
Reporting to Police

For cases of detection of counterfeit notes of 5 or more pieces, in a

single transaction, the counterfeit notes should be forwarded by the
branch immediately to the local police authorities or the Nodal Police
Station for investigation by filing FIR in the prescribed format (Annex IV).

Branch would also forward a copy of the format to the Nodal Officer
for information. Acknowledgement to be obtained and kept on
record.
 Till the time of forwarding the counterfeit currency
notes to Police Authorities/ Nodal Police station, these
must be kept in Joint Custody

Nodal Bank Officer will generate report for counterfeit

Currency Notes reported during the month by all the
branches linked to him, from CCR portal and ensure
that all counterfeit currency notes detected and

Reporting impounded by the branches have been reported.

to Police Acknowledgement of the police authorities

concerned be obtained for counterfeit notes
forwarded to them along with FIR as well as at the
time of monthly reporting, as the case may be.

If the counterfeit notes are sent to the police by

insured post, acknowledgement of receipt thereof by
the police should be invariably obtained and kept on
record
 In case any difficulty is faced by the Offices/
Branches due to reluctance of the police to receive
monthly consolidated statement/ file FIRs, the
matter may be sorted out in consultation with the
Nodal Officer of the police authority designated to
coordinate matters relating to investigation of
counterfeit bank notes cases.

Reporting The list of Nodal Police Station may be obtained

from the respective Regional Office of Reserve
to Police Bank.

A copy of the monthly consolidated report/ FIR shall

be sent to the Forged Note Vigilance Cell
constituted at LHO by the Nodal Officer
Preservation of Counterfeit Notes
received from Police Authorities

 All Counterfeit Notes received back from the

police authorities/ Courts be advised to FNVC and
should be carefully preserved in the safe custody
of the branch where these were detected and a
record thereof be maintained by the branch in a
separate folio in Branch Documents Register.
 Nodal Officers concerned/FNVC at the LHO shall
also maintain a branch-wise consolidated record
of such Counterfeit Notes
 Counterfeit Notes, which are the subject matter of
litigation in the court of law should be preserved
by the branch concerned for three years after
conclusion of the court case
 These Counterfeit Notes at branches should
Preservation 
be subjected to verification on a half-yearly
of basis (on 31st March and 30th September)
by the Branch Manager.
Counterfeit
 Counterfeit notes should be preserved for a
Notes period of three (3) years from the date of
received receipt from the police authorities. Such
Counterfeit Notes should be sent to the
from Police concerned Issue Office of Reserve Bank of
India with full details thereafter.
Authorities
 Such counterfeit notes be physically verified
by all the officials verifying Cash/ Currency
Chests ensuring quantity as per record.
These officials must tally these numbers with
CCR portal. Any difference/missing numbers
be indicated in the report.
 RBI has since amended the Note Refund Rules
Reserve 
2009 to enable general public to exchange
mutilated notes in Mahatma Gandhi
Bank of (New)series at Bank branches,
India (Note  The damaged banknotes have been classified
into four categories viz. Soiled, Mutilated,
Refund) Imperfect and Mismatched Notes. Accordingly,
based on the extent of damage, the refund
Rules, 2009 rules have been laid down for various
denominations of damaged currency notes.
 RBI has changed the minimum area of the
single largest undivided piece of note required
for payment of full value for notes of rupees fifty
and above to 80% from earlier 65%,
 In case of less than rupees fifty denomination it
may be refunded in full if the undivided area of
the single largest piece of the note above to
50%
Notes of less than Rs.50 denomination

Full Value will be paid if the single

largest undivided piece of the
"mutilated" note is more than 50% of
the area of the respective
No provisions for payment of Half
denomination. But, your claim for
Value
refund will be rejected if the largest
undivided piece of the damaged
note is 50% or less than the area of
the original note
Notes of denomination Rs.50 or more

Zero Value : If the area of the

Half Value : If the area of the
single largest undivided
single largest undivided
piece of the mutilated note
piece is between 40% to
is less than 40% of the area of
80% of the original note
the respective denomination

Full Value : If the area of the single

largest undivided piece is more than
80%.
Full Value : If there are two pieces of
the same note and each piece has
an area of 40% or more.
 A ‘soiled note' means a note which has
Soiled 
become dirty due to normal wear and tear
Notes and also includes a two-piece note pasted
together wherein both the pieces presented
belong to the same note and form the entire
note with no essential feature missing
 These notes should be accepted over bank
counters in payment of Government dues
and for credit to accounts of the public
maintained with banks
 However, in no case, these notes should be
issued to the public as re-issuable notes and
shall be deposited in currency chests for
onward transmission to RBI offices as soiled
note remittances for further processing.
MUTILATED NOTES

A mutilated note is The notes so presented

a note of which a Mutilated notes shall be accepted,
portion is missing, or may be presented exchanged and
which is composed at any of the bank adjudicated in
of more than two branches. accordance with
pieces. Reserve Bank of India
(Note Refund) Rules
  After adjudicating mutilated notes, the
Prescribed Officer is required to record
his order by subscribing his initials to the
dated 'PAY'/ 'PAID'/ 'REJECT' stamp.
 The 'PAY' /'PAID' & 'REJECT' stamps
should also carry the name of the bank
and branch concerned and held
under the custody of the 'Prescribed
Officer' to avoid misuse. Mutilated /
MUTILATED defective notes bearing 'PAY'/'PAID’ (or
'REJECT') stamp of any RBI Issue Office
NOTES 
or any bank branch
if presented for payment again at any
of the bank branches should be
rejected under Rule 6(2) of Reserve
Bank of India (Note Refund) Rules, 2009
and the tenderer should be advised
that the value of such note/s cannot
be paid since the same has already
been paid as is evident from the
PAY/PAID stamps affixed on it/them
  Regarding audit of the notes
adjudicated by bank branches, the full
value paid notes have to be remitted
by all branches to the chest branches
with which they have been linked and
therefrom to the Issue Offices
concerned together with the next
soiled note remittance
 The half value paid notes and rejected
notes, which are held by the chest
MUTILATED branches in their cash balance, may
either be remitted separately packed
NOTES together with the full value paid notes
or sent by registered and insured post
as and when required.
 The full value paid notes will be treated
as chest remittance by the Issue Office
while the half value paid notes and
rejected notes will be treated as notes
tendered for adjudication and
processed accordingly
  All branches of banks in all parts of the
country are mandated to provide the
following customer services, more actively
and vigorously to the members of public so
that there is no need for them to approach
the RBI Regional Offices for this purpose:
 (i) Issuing fresh / good quality notes and
Facility for 
coins of all denominations on demand,
(ii) Exchanging soiled / mutilated / defective
exchange 
notes, and
(iii) Accepting coins and notes either for

of notes transactions or exchange. In terms of section

6 (1) of The Coinage Act, 2011, the coins
issued under the authority of section 4 shall
and coins be a legal tender in payment or on account,
in case of :- a) a coin of any denomination
not lower than one rupee, for any sum not
exceeding one thousand rupees; b) a half-
rupee coin, for any sum not exceeding ten
rupees: Provided that the coin has not been
defaced and has not lost weight so as to be
less than such weight as may be prescribed
in its case.
 All branches should provide the
above facilities to members of public
without any discrimination on all
working days.

Facility for The availability of the above-

exchange mentioned facilities at the bank
branches should be given wide
of notes publicity for information of the public
at large.
and coins
None of the bank branches should
refuse to accept small denomination
notes and / or coins tendered at their
counters.
EXCHANGE OF SOILED NOTES
 Notes presented in small number: Where the
number of notes presented by a person is up to 20
pieces with a maximum value of Rs.5000 per day,
banks should exchange them over the counter,
free of charge.
 Notes presented in bulk: Where the number of
notes presented by a person exceeds 20 pieces or
Rs.5000 in value per day, banks may accept them,
against receipt, for value to be credited later.
Banks may levy service charges
 In case tendered value is above Rs.50000, banks
are expected to take the usual precautions.
OPERATIONS IN CURRENCY CHEST

Every day at the start of operations, the joint custodians withdraw cash from the chest
for daily operations and redeposit cash at the end of the day.

The amount withdrawn/deposited is entered in Vault Register. This Register is always held
in the joint custody of Cash Officer and Accountant and kept inside the strong room.

The min transaction in Currency Chest is Rs 1,00,000/- & in multiples of Rs 50,000/-

thereafter. The remainder of cash is retained as hand balance.

RBI has issued guidelines for timely & accurate reporting of currency chest transactions
to monitor the availability of notes & coins.

All transactions are reported to RBI everyday by uploading data through ICCOMS
software. Non reporting/ delayed/erroneous reporting is penalized by RBI.
 Penal  Levy of penal interest for delay in
reporting
interest for  In the event of delay in reporting currency
Delayed chest transactions, at the rate of 2% over
the prevailing Bank Rate for the period of

Reporting / delayed reporting/wrong reporting/non-

reporting /inclusion of ineligible amounts in

Wrong
chest balances will be levied
 Penal interest will be calculated on T+0
Reporting / basis i.e. penal interest will be levied in
respect of transactions not reported by
Non- currency chests / Link Offices to the Issue
Office by 6 pm on the same business day.
Reporting of However, Reserve Bank may at its
discretion grant appropriate grace period

Currency 
in the matter of levy of penal interest.
Penal interest will also be charged for
Chest delay in reporting before 6 pm by STOs
directly linked to Issue Department of the
Transactions circle.
 Penal  Penal interest will be levied in respect
interest for of all cases of wrong reporting

Delayed  It is expected that currency chests /

Link Offices would ensure the
Reporting / correctness of figures reported on the
CyM - CC portal. Particular care should
Wrong be taken to ensure that remittances of
fresh notes/notes to the currency
Reporting / chests are not reported as 'deposit'
transactions on the portal.
Non-  Rate of penal interest Penal interest
shall be levied at the rate of 2% over
Reporting of the prevailing Bank Rate for the period
of delayed reporting/wrong
Currency reporting/non-reporting /inclusion of
ineligible amounts in chest balances.
Chest
Transactions
 Penal  Diversions must not be reported as
Deposit/Withdrawal. A penalty of `
interest for 50,000 will be levied for such wrong
reporting.
Delayed  As the sole criterion for levy of penal
Reporting / interest for delayed reporting is the
number of days of delay, there should
Wrong ordinarily be no occasion for banks to
request for reconsideration of the
Reporting / Reserve Bank's decision in individual
cases. However, representations, if any,
Non- on account of genuine difficulties
faced by chests especially in
Reporting of hilly/remote areas and those affected
by natural calamities, etc., may be
Currency made to the Issue Office concerned
through the Head / Controlling office
Chest of the bank concerned within a month
from the date of debit of the bank
Transactions concerned
THANK YOU